Cost of delivery Essay

1. The chain stores request to reduce beat time by shipping directly to the stores would seriously affect the answer model and delivery costs for BKI. Because, the proposed model would mean that BKI would have to form more number of deliveries in smaller quantities and transport them separately to each(prenominal) store. Cost of delivery will increase due to smaller quantities to be delivered directly to stores resulting in more trips, farther distances and lower economies of scale.This is in put down contrast to the more structured and systematic current model of hebdomadal deliveries of standard quantities to the stores w atomic number 18houses. 2. In my opinion, Joe Rutners proposal of establishing a set of hexad company-owned facilities to act as regional DCs seems to be a step in the right direction for taking on the offer chain requirements of BKIs customers in the future. Rather than dismissing this stores request as a one-off case and handling it on a temporary basis, Rutner has proposed a dissolver that is likely to take the company forward into the future.He understands that the retail stores are themselves are looking to cut costs by improving their stemma and supply chain management and such requests would become common from around if not all of the existing customers. Moreover the new retail stores mushrooming in the market are likely to have less regional facilities and would pick up the proposed arrangement from BKI. 3. The matter of ownership of these facilities is very important for the success of this proposed supply chain arrangement as the management of BKI needs to study the long term impact of the costs involved.In the long term it would be better if BKI goes for direct ownership of the facilities as it would benefit the profitability of the trading operations by keeping the costs of maintenance lower than those involved in the alternatives such as co-owned or franchisee structure. However, the management will have to take t he availability of capital resources if it opts for direct ownership. The capital required for the facilities could be bring down to an extent by going for rented building rather than constructing new premises. This would pass the time required to implement the new proposal also.